USD/CAD Forecast July 17, 2017, Technical Analysis

USD/CAD daily chart, July 17, 2017

The US dollar went sideways initially during the session on Friday, but then collapsed after fairly weak inflationary numbers came out of the United States. This only exacerbates the differential between bonds in the US and Canada, and therefore sent this market much lower. I believe that we are going to go looking for the 1.26 level next, and then eventually the 1.24 level. The oil markets rallying could also cause quite a bit of bullish pressure as well, but that is probably a little less of an issue now that it typically is. This market has broken down through several major support levels, so it looks as if the Canadian dollar will continue to strengthen.

Selling rallies

I think the best thing you can do is sell rallies that show signs of exhaustion. You can see that we spent 36 hours going sideways after the initial move lower from the interest rate high, and it now appears that the longer-term move continues. I don’t have any interest in buying, and I believe that the 1.2725 area above will offer a bit of a “ceiling” in the market. Ultimately, I think that the market will be volatile, but it certainly should be negative. Short-term traders will continue to punish this market, and longer-term traders continue to hold the Canadian dollar. With this being the case, I don’t have an interest in buying, least not until we break well above the 1.28 handle, something that doesn’t look likely to happen anytime soon.

Written by FX Empire